After an abrupt stoppage, recovered fiber is starting to cross oceans again.
One of the most common trade routes for scrap paper—from North America to China—was met with a high hurdle in late 2008 when both demand and credit markets seized up.
According to panelists at a session at Recycling Today’s Paper Recycling Conference in Atlanta, the worst of that turmoil seems to be over, although some after-effects remain. The end result, said moderator John D’Ornellas of Western Pacific Pulp & Paper, Downey, Calif., is that “over the past nine months, our world has become smaller.”
Scrap paper exporter Judy Lee of JC Horizon Ltd., Arcadia, Calif., noted that in 2008, ONP (old newspapers) dropped in value from $250 per ton in the summer to $50 per ton in November, while OCC (old corrugated containers) fell from $150 to $50 in the same span. But worse, said Lee, “There was just no demand . . . no orders,” she said of the fall 2008 period.
Some buyers of recovered fiber exhibited bad behavior, she commented, by not honoring orders, not opening letters of credit or finding a discrepancy in letters of credit or quality issues that amounted to “market claims.”
The industry has since begun to recover, says Lee, who said “demand for paper [in China] is expected to boom. China will still be the world’s biggest manufacturer in the next 20 years,” she continued. “They’ll need scrap paper, plastics and metals.”
Panelist Amit Patel of HnS International in the Netherlands exports fiber to India and China, and remarked that his customers in India “kept buying all through the panic phase” of late 2008.
Patel noted that only 10 percent of India’s economy is based on exporting goods (and even that portion is largely software), so that most of its paper—even its packaging grades—is part of a domestic loop. “Demand [for scrap paper] in India has been stable and even up slightly,” said Patel.
He also commented that in traveling through China in late May and early June, he observed mills that were demonstrating steady production and that were securing fiber supply from Japan and South Korea.
Regarding the reneging on of contracts in late 2008, Patel said, “I think both the dirty players and the good players have shown their true colors.”
Recycler Jonathan Sloan of Canusa Hershman Recycling Co., Baltimore, also referred to the October and November 2008 volatility, and noted that supply kept coming into plants like his from municipal sources even as demand disappeared, creating “an imbalance between supply and demand.”
Like Patel, Sloan said the “true colors” of many in the industry were revealed, and that situations “left some companies in some tough financial conditions.”
A lagging effect of the 2008 financial crisis has been the difficulty of obtaining credit insurance. “We have seen some coverage cancelled and curtailed and some country-specific cases where we had credit insurance and now we don’t, or lower levels of coverage have been put in place,” said Sloan.
Recycling Today’s Paper, Plastics and Electronics Conferences were held June 7-9 at the Hyatt Regency Atlanta in that city’s downtown.